Getting on the Property Investment Ladder

Property Investment: A Beginner's Guide

Investing in property is never risk-free, but, with a little planning and thought at the start it is possible to mitigate against some of that uncertainty. Going into it with a clear idea of what it is you want to invest in, and why, really can make all the difference.

Property investment funds, property development, buy to lets, holiday rentals, new builds, the list of ways you can get into property investment is very varied. For those who want a more long-term, hands off approach, then property investment funds offer a good solution. At the other end of the spectrum are development opportunities which, if you’re keen to do it yourself, can be very time consuming but extremely rewarding.

If you’re undecided about what would work for you, then it’s a good idea to think about why you want to invest. If you’re looking for a relatively quick cash return, then a cash investment is probably the only option – becoming an ‘angel investor’ providing cash to a help fund a project for a fixed return over a fixed period of time (subject to meeting the FCA investor rules and criteria). However, if you’re looking for a medium to long-term investment, to invest savings, generate extra income, or just fancy a career change into property, then it’s definitely worth considering investing in your own property.

If you’re starting out, then buy to let is often a very appealing option, allowing you as little or as much involvement as you want in running the property and, fingers crossed, generating you a regular income, but before you start scrolling through Rightmove for the perfect place there are some key points to consider.

Time To Reflect

Image of country street with terraced houses
Budget setting is crucial, don’t forget to consider all the hidden costs of purchasing a property

Firstly, you need to understand what sort of investor you are. Are you a sole investor or are you going into this with other partners? If it’s just you, then can you afford to pay all of the initial costs before the rent starts to come in?

Once you’re clear about your position, consider how you’re going to finance the investment. For most property investors, an element of debt is inevitable at the outset. But investing in the right property can be seen as a good debt, one which will enhance your financial situation in the long-term.

It’s easy to get carried away with the thrill of looking for an investment opportunity, but before you make an offer think about those upfront costs that are going to hit you before you’re beginning to make any sort of return on the property. Take the time to look at property prices carefully and decide what you can afford alongside paying out for stamp duty, mortgage and solicitor fees, insurance and running costs.

Location, Location, Location

Hand in hand with these financial considerations, comes the practical aspect of what sort of property you’re looking for and its location. After all, you want to make a return on your investment so the decision about what and where to buy is not one to be taken lightly. Ideally you want to find the perfect combination of good location and high demand, which will vastly increase the chances of you making a profit. Having an understanding of the average cost of buying in your chosen area and an idea about the average rental yield is key to working out what you can afford.

If your goal is an increase in your overall capital then a high value property in an upmarket area may be a good option. If your focus is a regular income, then a lower value property in a less affluent area may be the answer. It’s also important to look to the future. Is the property somewhere you could refurbish or renovate to add value and is there investor demand if you want to sell the property in a few years?

The People Bit

Just as important, is agreeing the type of tenant you’re appealing to. For instance, a young couple who want to live in the city have very different needs from a large family who want to live in a small village. Once you have a picture in your mind of the ‘ideal tenant’ then the property search becomes that bit clearer, you understand what they’re looking for and what really wouldn’t work for them.

Couple decorating a room
Building a picture of your ‘ideal’ tenant can help narrow down the search

In amongst all of this don’t forget about you. From a personal point of view, do you want to be near the property? If you’re planning on being a hands-on landlord then it will make a huge difference if you live in the same town rather than a couple of hours away.

When you’ve answered all of these questions, it’s time for the fun bit, you get to start property hunting. You can be safe in the knowledge that you’ve understood the risks involved, you have a clear idea of what will work for you, personally and financially, and a pretty good idea of where and what you’re looking for.

It's Good To Share

We’re proud to say that at CPP we’re big fans of due diligence (as you might be able to tell!), and we’re always happy to share the load. We have our own network of mortgage advisors, solicitors and surveyors, all of them experts in their field, and we don’t hesitate to ask for their help and support. In fact, we don’t know what we’d do without them. Taking on a property investment is a big step, so don’t be afraid to create your own network of experts who can help make your journey as smooth as possible.

If you’d like to find out more about how property investment could work for you then we’d love to chat. You can email us at hello@cotswoldpropertypartners.com or call 07736 847960

Enquire about a property

We use cookie to improve your experience on our site. By using our site you consent Cookies. Learn more Allow Cookies